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Director's remuneration is professional fees or salary

Neha (gjjgjg) (31 Points)

19 March 2012

dear all.....please let me know whether tax is deducted u/s 194 J (i.e.10% on professional fees) on directors remuneration or not.......according to the union budget 2012-13

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Sonam Bidasaria (CA) (770 Points)
Replied 19 March 2012

It has been specifically mentioned in Memorandum of Union Budget, that any payment made in the nature of salary on which TDS under Sec 192 is deductible, will not fall under this provision (ie provision of TDS @ 10% under Sec 194J).

However, on sitting fees or any other payment, 194J will be applicable.

satish kumar voleti (A.C.A., (ICWAI)) (1686 Points)
Replied 19 March 2012

Section 194J of the Act – Tax deduction at source from payment to director

Under the existing provisions of the Income-tax Act, a company, being an employer, is required to deduct tax at the time of payment of salary to its employees including Managing director/whole time director. However, there is no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary.

It is proposed to amend section 194J to provide that tax is required to be deducted on the remuneration paid to a director, which is not in the nature of salary, at the rate of 10% of such remuneration.

Impact - By insertion of the new clause, now any amount payable to a director of a company, by way of remuneration or fees or commission, which is not in the nature of salary, shall be liable for tax deduction under Section 194 at the rate of 10%. Accordingly, any payment to a director (whether whole-time or not) including siting fee made by a company would be liable for tax deduction at source. This would levy an extra compliance burden and responsibility on the companies for deducting taxes on payment made to its directors

sai kumar (CA) (160 Points)
Replied 19 March 2012

Under sec 194j of the incometax act,in sub-sec(1),after clause,,any remuneration or fees or commission by whaat ever name called,other than those on which tax is deductible u/s 192, to a director of a company.....it is with effect from 1st july 2012

so, according to budget 2012-13, the tax is deductible u/s 194j, on director remuneration

srinivass (CA Final) (2466 Points)
Replied 19 March 2012

Agree with all .sai nice to see you long back your all most correct

Sonam Bidasaria (CA) (770 Points)
Replied 19 March 2012

Originally posted by : sai kumar
	Under sec 194j of the incometax act,in sub-sec(1),after clause,,any remuneration or fees or commission by whaat ever name called,other than those on which tax is deductible u/s 192, to a director of a company.....it is with effect from 1st july 2012 so, according to budget 2012-13, the tax is deductible u/s 194j, on director remuneration

Plz note that TDS u/s 192 is deducted on the Directors Remuneration in current provision also, and in the amendment and as you have told "any remuneration or fees or commission by whaat ever name called,other than those on which tax is deductible u/s 192, to a director of a company"

It can be concluded that TDS u/s 194J is not deducted on Directors Remuneration.

k sudheer chowdary (Articled Trainee) (71 Points)
Replied 19 March 2012

Actully Till Now, For Directors Remuneration TDS Will Be Deducted Under 192 As Natur Of Salary, But As Per Latest Budget It Was Under 194j As Professional Fees (Applicable Rate 10%)

Sonam Bidasaria (CA) (770 Points)
Replied 19 March 2012

Please refer Memorandum of Direct Taxes of Finance Bill, in which it has been clearly stated:

"Under the existing provisions of the Income-tax Act, a company, being an employer, is required to deduct tax at the time of

payment of salary to its employees including Managing director/whole time director. However, there is no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary.

It is proposed to amend section 194J to provide that tax is required to be deducted on the remuneration paid to a director,

which is not in the nature of salary, at the rate of 10% of such remuneration.

This amendment will take effect from 1st July, 2012."

Director Remuneration is not covered under Sec 194J

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CA Parag Jani (BCom CA DISA Forensic Auditor) (288 Points)
Replied 21 July 2012

What if a director receives Remuneration which is subjected to TDS U/s 194-J by the paying Company, then Can that director claim deductions like Depreciation on his own car or interest on car loan which he used for providing services as director to that company?

Husain (Accountant) (28 Points)
Replied 05 September 2012

Dear Sir,

Pvt. Ltd. co. director will get a salary? Limitation of a salary wil get month.

CA BHUVNESH S.VILAYATRANI (CHARTERED ACCOUNTANT) (282 Points)
Replied 16 October 2012

The Remuneration paid to a Director,which is not in the nature of Salary,is covered undernSection 194J.TDS rate is 10% of such Remuneration.This Amendment will take effect From 01-07-2012

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